Games development tax relief: sounds great, why wasn't it implemented?

Last week, David Cameron set out an ambitious plan to transform East London into ;a hi-tech hub to rival Silicon Valley in California.

He revealed that Google, Facebook and a number of other cutting-edge companies have committed to invest in the Olympic Park area in Stratford, apparently enticed by the prospective of generous tax breaks.

UK video game developers have slated the 'Silicon Marshes' plan, however, because the high-tech tax incentives are restricted to London and won't be rolled out nationally.

"It seems to me the prime minister is missing a trick with this announcement in London," acknowledged Richard Wilson, head of the games industry lobby group Tiga.

"Implementing the tax breaks we're calling for wouldn't just create jobs in London, but in Dundee, Edinburgh, York, Brighton, Leamington Spa, Birmingham, and all over the country."

He added: "Before the election both the Conservatives and Liberal Democrats committed to tax relief on games development, but they've reneged on it. We're very disappointed about it. We aren't on a level playing field with Canada and France -- Canada increased its game developer headcount last year."

According to its research, offering tax breaks would also stem the loss of thousands of jobs. It says that between July 2008 and September 2010 employment fell 9% in the UK games development sector, as firms relocated to countries like Canada, which provides subsidies of up to 40% of production costs and tax relief of 35% on labour costs.

While Bobby Kotick, chief executive of games company Activision, says that without tax breaks it simply makes no sense to invest in Britain: "It is ridiculously expensive to live in the UK, especially in London... What dictates our expansion plans would be whether we can compensate our employees fairly and whether they can achieve the quality of life that they want."

Time to take a second look at games development tax relief then, Mr Cameron?

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